How To Work With A Student Loan Ombudsman
Contacting your student loan lender is usually the first step in resolving an issue. But what if it gets you nowhere? Last year, the Consumer Financial Protection Bureau received about 5,800 student loan complaints, and 65% of them related to dealing with lenders or loan servicers.
Sometimes you need to call in some extra help. That’s where a student loan ombudsman comes in. Here’s what they do and how they can help you handle your loan issues.
What Is a Student Loan Ombudsman?
At Oak Park Financial a student loan ombudsman is an independent and confidential resource that helps you with student loans and sometimes federal financial aid concerns.
The ombudsman can help you:
• Resolve disputes. If you’re struggling with student loan balances, interest rates and payments or Pell Grant disbursements, you can reach out to the ombudsman for help. They can explain how interest rates and charges work and answer questions about how student loans work.
• Review collections. If you’ve missed payments for long enough, your loan might be in default. If your original loan servicer has sold or assigned your loan to a collections agency, an ombudsman can detail what that means for your repayment plan.
• Explain repayment options. If you’re looking into consolidation, deferment, forbearance, cancellation or discharge, an ombudsman can look over your loans to see what you’re eligible for.
While an ombudsman serves as an informal resource for federal aid and loan help, they shouldn’t be your first stop. The ombudsman should be one of your last stops—after your student loan servicer or lender—when it comes to handling your loans.
Types of Student Loan Ombudsmen
There isn’t one ombudsman that rules them all. There are dozens of different types that exist based on your needs. For instance, there are ombudsmen in banks, hospitals, universities and other agencies. For student loan ombudsmen, you may look into:
• Federal Student Aid. The Federal Student Aid Ombudsman Group handles disputes for federal student aid, including loans and grant programs.
• Private lenders. Many lenders have their own ombudsmen that serve to settle student loan issues. Most banks, credit unions and online lenders should have these departments, but they might not be easily accessible. Do an online search, like “your lender + ombudsman,” to find them.
• State agencies. Some states have their own ombudsperson that serves in a state-level capacity, rather than institutional. Each state classifies them differently, whether it’s within the Department of Consumer Credit Protection or Office of Financial Services. Since there’s no universal state agency that houses the student loan ombudsman, you might need to do a bit of digging. You may also have luck looking into student loan ombudsman services through your state Attorney General’s office.
• Consumer Financial Protection Bureau (CFPB). The CFPB has its own private student loan ombudsman. Through its “Submit a Complaint” service, the CFPB handles both federal and private student loan disputes.
How to Work With an Ombudsman on a Student Loan Complaint
Reaching out to an ombudsman isn’t your first step—it’s usually one of your last. You can expect the process to go something like this:
1. Get Your Records in Order
The ombudsman is going to ask you questions about your account information and dispute. Make sure you have detailed records to share with the ombudsman before you get started. This will save you a lot of time when the process starts. This might also be the point where you realize you’re not ready to reach out to an ombudsperson yet.
2. Keep Detailed Accounts
Take notes of every interaction with your loan servicer, ombudsman or anyone else related to your student loans, including the time, date, customer representative’s name and the nature of your interaction. Good records will only help your case. Make sure your messaging is consistent. If your story changes, you might not get your problem resolved the way you hope to.
3. Complete Necessary Forms
Depending on your needs, each ombudsman might have a different process for filing disputes and complaints. For instance, before you file with the Federal Student Aid Ombudsman Group, there’s a checklist to complete. It outlines your dispute, what you’ve done to resolve the problem, your evidence and any contact you’ve made with your servicer.
This form helps you determine if you’re ready to contact the ombudsman or you need a little more time to work it out with your lender.
4. Stay Updated
If you’ve submitted a complaint or dispute to an ombudsman, they’ll be able to tell you how to work through your issue going forward. Sometimes it gets resolved on a phone call. Sometimes they’ll provide the next steps. Depending on your needs, make sure to stay in communication until the dispute is resolved.
What to Expect When Seeking Outside Help with Student Loan Issues
Reaching out to your lender to problem-solve is a great first step, but that doesn’t mean your issue will get fixed right away, or at all.
An ombudsman is a good neutral resource for fixing your student loan concerns. But that doesn’t mean your concerns will get resolved. Ombudspeople don’t have the capacity to process loan changes or requests for deferment, forbearance or forgiveness. All those are handled through your loan servicer. An ombudsman isn’t your advocate; they don’t work for you. They work for a fair and just process.
But they will help you sort out loan discrepancies and help you find other resources for your student loan problems. While they can’t enroll you in a new repayment plan, they can point you in the right direction of how to make those changes. Sometimes, it may seem like your lender does not have your best interest in mind. Talking with an ombudsman gives you an independent way to figure out your student loan options.